More than a third of the homes currently for sale in Folsom are short sales. Although it's sad to see that number realizing it represents neighbors in distress, the good news is these residents are being pro-active about resolving their mortgage woes. Too many homeowners still take a "head in the sand" approach to their housing problems and wait too long to address them and wind up being foreclosed on. This is unfortunate. As painful and stressful as short sales can be, I can give you five good reasons why you want to do all you can to avoid a foreclosure.
1. Foreclosure Follows You. Credit inquiries specifically ask about foreclosure. And there is no seven-year time limit on this one. So you will have to keep disclosing on mortgage applications or job applications that you went through a foreclosure.
2. Negative Impact on Your Credit Score. Did you know your credit scores will be lowered by 300-plus points (per loan) if you went through a foreclosure?
3. Ineligible for a Government-Insured Loan. You will be ineligible for a government-insured loan for between 5-7 years after a foreclosure. Homeowners who go the short sale route can apply for a government-insured loan after only 2 years!
4. Deficiency Judgement. Even if your lender forecloses, they can still seek a deficiency judgment against you and try to recuperate any amount they didn't get back at the bank sale.
5. Employment Credit Checks. Many employers run credit checks on prospective employees. A foreclosure on your record could be a strong negative for some employers.
As you see, a foreclosure will follow you a long time. Not that a short sale instantly gives you a clean slate, but it'll sure be easier to get beyond it.
